City plans to borrow money for storm recovery

TUSCALOOSA | It took 19 months, but city leaders are making the first moves toward borrowing money to pay for the recovery effort from the 2011 tornadoes.

By Jason MortonStaff Writer

TUSCALOOSA | It took 19 months, but city leaders are making the first moves toward borrowing money to pay for the recovery effort from the 2011 tornadoes.On Tuesday, the City Council’s Finance Committee voted to secure a line of credit of up to $10 million from Regions Bank.The purpose of the credit line is to have the means to issue immediate payment for such projects as the intersection realignments and overall improvements to McFarland Boulevard and 15th Street/Veterans Memorial Parkway and fulfill its share of the financial obligations that went toward debris removal and cleanup after the April 2011 storms.“We’re going to have to reinvest in our city,” said Councilman Lee Garrison, chairman of the Finance Committee. “And to do that, we’re going to have to borrow some money because we don’t have $50 million sitting in the bank ... and I don’t think many governments do.”Federal and state assistance has allowed City Hall to, so far, limit its investment in the $11.4 million in funds that have been submitted for reimbursement through the Federal Emergency Management Agency.This includes $7.5 million taken from its store of surplus funds, of which $11.5 million remains in the General Fund’s Reserve for Future Improvement fund.However, city policy prevents this total from dipping below $11.2 million, which is 10 percent of the prior year’s General Fund operating budget. The City Council could vote to violate this policy, but city leaders have expressed the desire to keep this policy in place and save the money for emergencies and the uncertainty of those submitted FEMA reimbursements.Cost estimates for the city’s combined share of debris removal and the McFarland Boulevard and 15th Street improvements are estimated to fall between $3 and $5 million.Recent talks have led to a tentative plan to borrow money through a bond issue to fund the road work as well as the city’s share of the Tuscaloosa Park and Recreation Authority’s ambitious five-year plan that carries a price tag of $15.3 million. However, Maddox said that the funding for the road work and debris removal could be due well before city funds are needed to execute PARA’s plan.This, the mayor said, led to his support for securing the credit line.“It’s just to get this in place in case one of these big-ticket items hits,” Maddox said.Garrison voiced concern to his fellow council members that borrowing money would reflect poorly on the city’s financial situation, and pointed to the city’s current bond ratings with Moody’s (Aa1) and Standard & Poor’s (AA+) current per-capita debt ratio for its about 90,000 residents, which is among the lowest in the state.“It’s outstanding what we’ve accomplished, considering the circumstances,” Garrison said.According to the Public Affairs Research Council of Alabama, based at Samford University, Tuscaloosa’s per capita debt service was $88. This places Tuscaloosa’s rate of debt-per-resident below the state median of $145 and well under Huntsville’s rate of debt per capita of $329.The research council published this data in its fall 2012 municipal comparison report of Alabama’s largest cities and used numbers from 2010.